SOUTHERN CO
For the period ended Dec 31, 2023. Filed Feb 15, 2024.
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FY2023 · Filed Feb 15, 2024
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Segment and Related Information
- SEGMENT AND RELATED INFORMATION
Southern Company's reportable business segments are the sale of electricity by the traditional electric operating companies, the sale of electricity in the competitive wholesale market by Southern Power, and the sale of natural gas and other complementary products and services by Southern Company Gas. Revenues from sales by Southern Power to the traditional electric operating companies were $537 million, $875 million, and $515 million in 2023, 2022, and 2021, respectively. Revenues from sales of natural gas from Southern Company Gas to the traditional electric operating companies were immaterial for all periods presented. Revenues from sales of natural gas from Southern Company Gas (prior to its sale of Sequent) to Southern Power were $18 million in 2021. The "All Other" column includes the Southern Company parent entity, which does not allocate operating expenses to business segments. Also, this category includes segments below the quantitative threshold for separate disclosure. These segments include providing distributed energy and resilience solutions and deploying microgrids for commercial, industrial, governmental, and utility customers, as well as investments in telecommunications. All other inter-segment revenues are not material.
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Financial data for business segments and products and services for the years ended December 31, 2023, 2022, and 2021 was as follows:
| Electric Utilities | ||||||||
|---|---|---|---|---|---|---|---|---|
| TraditionalElectricOperatingCompanies | SouthernPower | Eliminations | Total | Southern Company Gas | AllOther | Eliminations | Consolidated | |
| (in millions) | ||||||||
| Operating revenues | $18,358 | $2,189 | $(549) | $19,998 | $4,702 | $718 | $(165) | $25,253 |
| Depreciation and amortization | 3,361 | 504 | — | 3,865 | 582 | 78 | — | 4,525 |
| Interest income | 69 | 7 | — | 76 | 9 | 26 | (26) | 85 |
| Earnings from equity method investments | (1) | — | — | (1) | 140 | 5 | — | 144 |
| Interest expense | 1,145 | 129 | — | 1,274 | 310 | 879 | (17) | 2,446 |
| Income taxes (benefit) | 571 | 12 | — | 583 | 211 | (298) | — | 496 |
| Segment net income (loss)(a)(b)(c)(d) | 3,637 | 357 | — | 3,994 | 615 | (635) | 2 | 3,976 |
| Goodwill | — | 2 | — | 2 | 5,015 | 144 | — | 5,161 |
| Total assets | 100,429 | 12,761 | (545) | 112,645 | 25,083 | 2,446 | (843) | 139,331 |
| Operating revenues | $20,408 | $3,369 | $(904) | $22,873 | $5,962 | $593 | $(149) | $29,279 |
| Depreciation and amortization | 2,513 | 516 | — | 3,029 | 559 | 75 | — | 3,663 |
| Interest income | 44 | 3 | — | 47 | 3 | 16 | (7) | 59 |
| Earnings from equity method investments | — | — | — | — | 148 | 3 | — | 151 |
| Interest expense | 929 | 138 | — | 1,067 | 263 | 694 | (2) | 2,022 |
| Income taxes (benefit) | 828 | 20 | — | 848 | 180 | (233) | — | 795 |
| Segment net income (loss)(a)(b)(e)(f) | 3,318 | 354 | — | 3,672 | 572 | (711) | (9) | 3,524 |
| Goodwill | — | 2 | — | 2 | 5,015 | 144 | — | 5,161 |
| Total assets | 95,861 | 13,081 | (659) | 108,283 | 24,621 | 2,665 | (678) | 134,891 |
| Operating revenues | $16,614 | $2,216 | $(530) | $18,300 | $4,380 | $582 | $(149) | $23,113 |
| Depreciation and amortization | 2,436 | 517 | — | 2,953 | 536 | 76 | — | 3,565 |
| Interest income | 20 | 1 | — | 21 | — | 4 | (3) | 22 |
| Earnings from equity method investments | 1 | — | — | 1 | 50 | 24 | 1 | 76 |
| Interest expense | 821 | 147 | — | 968 | 238 | 631 | — | 1,837 |
| Income taxes (benefit) | 232 | (13) | — | 219 | 275 | (227) | — | 267 |
| Segment net income (loss)(a)(b)(g)(h)(i) | 1,981 | 266 | — | 2,247 | 539 | (384) | (9) | 2,393 |
| Goodwill | — | 2 | — | 2 | 5,015 | 263 | — | 5,280 |
| Total assets | 89,051 | 13,390 | (667) | 101,774 | 23,560 | 2,975 | (775) | 127,534 |
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(a)Attributable to Southern Company.
(b)For the traditional electric operating companies, includes pre-tax charges (credits) to income at Georgia Power for the estimated probable loss associated with the construction of Plant Vogtle Units 3 and 4 of $(68) million ($(50) million after tax) in 2023, $183 million ($137 million after tax) in 2022, and $1.7 billion ($1.3 billion after tax) in 2021. See Note 2 under "Georgia Power – Nuclear Construction" for additional information.
(c)For Southern Power, includes an $18 million pre-tax loss recovery ($9 million after tax and partnership allocations) related to an arbitration award and a $16 million pre-tax gain ($12 million after tax) on the sale of spare parts. See Note 3 under "General Litigation Matters – Southern Power" for additional information.
(d)For Southern Company Gas, includes pre-tax charges totaling approximately $96 million ($72 million after tax) associated with the disallowance of certain capital investments at Nicor Gas. See Note 2 under "Southern Company Gas" for additional information.
(e)For Southern Company Gas, includes pre-tax impairment charges totaling approximately $131 million ($99 million after tax) related to the sale of natural gas storage facilities. See Note 15 under "Southern Company Gas" for additional information.
(f)For the "All Other" column, includes a $119 million goodwill impairment loss (pre-tax and after tax) at PowerSecure. See Note 1 under "Goodwill and Other Intangible Assets" for additional information.
(g)For Southern Power, includes gains on wind turbine equipment contributed to various equity method investments totaling approximately $37 million pre-tax ($28 million after tax). See Notes 7 and 15 under "Southern Power" for additional information.
(h)For Southern Company Gas, includes a pre-tax gain of $121 million ($92 million after tax) related to its sale of Sequent, as well as the resulting $85 million of additional tax expense due to changes in state apportionment rates, and pre-tax impairment charges totaling $84 million ($67 million after tax) related to its equity method investment in the PennEast Pipeline project. See Notes 7 and 15 under "Southern Company Gas" for additional information.
(i)For the "All Other" column, includes a pre-tax gain of $93 million ($99 million gain after tax) associated with the termination oftwo leveraged leases projects. See Note 15 under "Southern Company" for additional information.
Products and Services
| Electric Utilities' Revenues | ||||
|---|---|---|---|---|
| Year | Retail | Wholesale | Other | Total |
| (in millions) | ||||
| 2023 | $16,343 | $2,467 | $1,188 | $19,998 |
| 2022 | 18,197 | 3,641 | 1,035 | 22,873 |
| 2021 | 14,852 | 2,455 | 993 | 18,300 |
| Southern Company Gas' Revenues | ||||
|---|---|---|---|---|
| Year | GasDistributionOperations | GasMarketingServices | All Other | Total |
| (in millions) | ||||
| 2023 | $4,090 | $548 | $64 | $4,702 |
| 2022 | 5,240 | 638 | 84 | 5,962 |
| 2021 | 3,656 | 475 | 249 | 4,380 |
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Southern Company Gas manages its business through three reportable segments – gas distribution operations, gas pipeline investments, and gas marketing services. Prior to the sale of Sequent on July 1, 2021, Southern Company Gas' reportable segments also included wholesale gas services. The non-reportable segments are combined and presented as all other. See Note 15 under "Southern Company Gas" for additional information on the disposition activities described herein.
Gas distribution operations is the largest component of Southern Company Gas' business and includes natural gas local distribution utilities that construct, manage, and maintain intrastate natural gas pipelines and gas distribution facilities infour states.
Gas pipeline investments consists of joint ventures in natural gas pipeline investments including a 50% interest in SNG and a 50% joint ownership interest in the Dalton Pipeline. These natural gas pipelines enable the provision of diverse sources of natural gas supplies to the customers of Southern Company Gas. See Notes 5 and 7 for additional information.
Through July 1, 2021, wholesale gas services provided natural gas asset management and/or related logistics services for each of Southern Company Gas' utilities except Nicor Gas as well as for non-affiliated companies. Additionally, wholesale gas services engaged in natural gas storage and gas pipeline arbitrage and related activities.
Gas marketing services provides natural gas marketing to end-use customers primarily in Georgia and Illinois through SouthStar.
The all other column includes segments and subsidiaries that fall below the quantitative threshold for separate disclosure, including storage and fuels operations. The all other column included a natural gas storage facility in Texas through its sale in November 2022 and a natural gas storage facility in California through its sale in September 2023.
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Financial data for business segments for the years ended December 31, 2023, 2022, and 2021 was as follows:
| Gas Distribution Operations · Gas Pipeline Investments · Wholesale Gas Services(a) · Gas Marketing Services · Total · All Other · Eliminations · Consolidated | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in millions) | |||||||||||||
| Operating revenues | $4,105 | $32 | $— | $548 | $4,685 | $36 | $(19) | $4,702 | |||||
| Depreciation and amortization | 561 | 5 | — | 15 | 581 | 1 | — | 582 | |||||
| Operating income (loss) | 804 | 22 | — | 130 | 956 | (4) | (13) | 939 | |||||
| Earnings from equity method investments | — | 140 | — | — | 140 | — | — | 140 | |||||
| Interest expense | 275 | 32 | 3 | 310 | — | — | 310 | ||||||
| Income taxes | 126 | 32 | — | 37 | 195 | 16 | — | 211 | |||||
| Segment net income (loss)(b) | 441 | 98 | — | 91 | 630 | (15) | — | 615 | |||||
| Total assets | 22,906 | 1,534 | — | 1,615 | 26,055 | 9,675 | (10,647) | 25,083 | |||||
| Operating revenues | $5,267 | $32 | $— | $638 | $5,937 | $55 | $(30) | $5,962 | |||||
| Depreciation and amortization | 516 | 5 | — | 16 | 537 | 22 | — | 559 | |||||
| Operating income (loss) | 803 | 21 | — | 133 | 957 | (135) | (8) | 814 | |||||
| Earnings from equity method investments | — | 148 | — | — | 148 | — | — | 148 | |||||
| Interest expense | 229 | 27 | — | 3 | 259 | 4 | — | 263 | |||||
| Income taxes (benefit) | 145 | 35 | — | 37 | 217 | (37) | — | 180 | |||||
| Segment net income (loss)(c) | 470 | 107 | — | 94 | 671 | (99) | — | 572 | |||||
| Total assets | 22,040 | 1,577 | — | 1,616 | 25,233 | 8,943 | (9,555) | 24,621 | |||||
| Operating revenues | $3,679 | $32 | $188 | $475 | $4,374 | $38 | $(32) | $4,380 | |||||
| Depreciation and amortization | 482 | 5 | — | 18 | 505 | 31 | — | 536 | |||||
| Operating income (loss) | 708 | 21 | 241 | 125 | 1,095 | (40) | — | 1,055 | |||||
| Earnings from equity method investments | — | 50 | — | — | 50 | — | — | 50 | |||||
| Interest expense | 207 | 25 | 2 | 3 | 237 | 1 | — | 238 | |||||
| Income taxes | 120 | 27 | 32 | 34 | 213 | 62 | — | 275 | |||||
| Segment net income (loss)(d)(e)(f) | 412 | 19 | 107 | 88 | 626 | (87) | — | 539 | |||||
| Total assets | 20,917 | 1,467 | 31 | 1,556 | 23,971 | 12,114 | (12,525) | 23,560 | |||||
(a)As a result of the sale of Sequent, wholesale gas services is no longer a reportable segment in 2023 or 2022. Prior to the sale of Sequent, the revenues for wholesale gas services were netted with costs associated with its energy and risk management activities. A reconciliation of operating revenues and intercompany revenues is shown in the following table.
| Third Party Gross Revenues · Intercompany Revenues · Total Gross Revenues · Less Gross Gas Costs · Operating Revenues | |||||
|---|---|---|---|---|---|
| (in millions) | |||||
| 2021 | $3,881 | $90 | $3,971 | $3,783 | $188 |
(b)For gas distribution operations, includes pre-tax charges totaling approximately $96 million ($72 million after tax) associated with the disallowance of certain capital investments at Nicor Gas. See Note 2 under "Southern Company Gas" for additional information.
(c)For the "All Other" column, includes pre-tax impairment charges totaling approximately $131 million ($99 million after tax) related to the sale of natural gas storage facilities. See Note 15 under "Southern Company Gas" for additional information.
(d)For gas pipeline investments, includes pre-tax impairment charges totaling $84 million ($67 million after tax) related to the equity method investment in the PennEast Pipeline project. See Note 7 under "Southern Company Gas" for additional information.
(e)For wholesale gas services, includes a pre-tax gain of $121 million ($92 million after tax) related to the sale of Sequent.
(f)For the "All Other" column, includes $85 million of additional tax expense as a result of the sale of Sequent.
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